Boeing (NYSE:BA) management highlighted improved operational performance, rising commercial production stability, and record backlogs during the company’s fourth quarter 2025 earnings call, while also outlining persistent cash flow headwinds tied to delayed certifications, prior delivery disruptions, and fixed-price defense development programs.
Turnaround progress and operational focus
President and CEO Kelly Ortberg said the company has “set the foundation for our turnaround” with stronger performance and record backlogs across commercial, defense, and services, while emphasizing that Boeing has “not fully turned the corner” but is “making real progress.” Ortberg reiterated the company’s four-point plan: stabilize the business, execute on development programs, change culture, and build a new future.
Commercial airplanes: production rates, deliveries, and certification timelines
On the 737 program, Ortberg said production is stabilizing at 42 airplanes per month, with on-time delivery performance improving “threefold” from the prior year and positive customer feedback on quality. He said Boeing plans to use the same monitoring and safety/quality discipline for future rate increases. For production above 47 per month, Boeing intends to add a new “North Line” in Everett, with facility and tooling investments complete and a staffing plan underway.
Executive Vice President and CFO Jay Malave reported Boeing Commercial Airplanes (BCA) delivered 160 airplanes in the quarter and 600 for the year. Fourth-quarter BCA revenue was $11.4 billion, and operating margin was negative 5.6%, with performance improving versus the prior year. Malave said the Spirit AeroSystems acquisition affected BCA segment margins by roughly 1.5 points in the quarter.
Program detail included:
- 737: 117 deliveries in the quarter and 447 for the year. Boeing raised the production rate to 42 per month in the quarter and said it remains on course to increase to 47 later in 2026. The company ended the year with one 737-8 built before 2023 remaining (“shadow factory” aircraft), which it expects to deliver in the first quarter. Inventory for the 737-7 and 737-10 was stable at about 35 airplanes.
- 787: 27 deliveries in the quarter and 88 for the year. The program is stabilizing at a rate of eight per month, and Ortberg said Boeing is targeting a rate increase to 10 later in 2026. Malave noted the program reduced average rework hours nearly 30% during 2025. Boeing ended the year with about five pre-2023 aircraft remaining in inventory and said it expects to deliver the remaining airplanes in 2026 in line with customer fleet plans. Boeing also broke ground on a factory expansion to support higher 787 rates.
- 777X: Boeing received approval for Type Inspection Authorization 3 (TIA 3) and continued certification flight testing. Ortberg said the company identified a “potential durability issue” during a recent inspection on the 777X engine and is working with GE to determine root cause and corrective actions, but he said Boeing does not expect the issue to affect first deliveries planned for 2027.
On certification, Ortberg said the 737-10 received TIA 2, enabling expanded certification flight testing focused on avionics, propulsion, autoflight, and other functions. He also said Boeing has a final set of design changes to permanently address engine anti-ice issues on the 737-7 and 737-10, and the company is “following the lead of the FAA” while still anticipating certification for both models in 2026.
Defense and services: milestones, tanker charge, and record backlogs
Ortberg pointed to progress in Boeing Defense, Space & Security (BDS), including a “transformational win” to build the U.S. Air Force’s sixth-generation fighter (referred to as F-47 during Q&A). He also cited key program milestones: the U.S. Navy’s MQ-25 completed its inaugural engine run, and Boeing delivered the first operational T-7A Red Hawk to the U.S. Air Force at Joint Base San Antonio-Randolph. Ortberg also noted Boeing ratified a new five-year labor agreement with the IAM-represented workforce in St. Louis.
Malave said BDS revenue rose 37% to $7.4 billion in the quarter, with operating margin improving to negative 6.8%. However, results included a $565 million loss on the KC-46A tanker. Malave said the tanker adjustment was driven by higher production support and other allocated costs in Everett, as well as higher estimated supply chain costs, including Spirit. He said additional production support costs reflected maintaining higher levels of quality and engineering support, and noted factory rework levels decreased by 20% in the fourth quarter compared to the first half of the year.
BDS booked $15 billion in orders during the quarter, including awards for 15 KC-46A tankers and 96 Apaches for Poland, lifting backlog to a record $85 billion.
Boeing Global Services (BGS) posted revenue of $5.2 billion, up 2% on improved government volume. Malave said operating margin was “abnormally high” due to the gain from the digital aviation solutions divestiture; on an adjusted basis, BGS revenue was $5.1 billion, up 6%, and adjusted operating margin was 18.6%. BGS booked $10 billion in quarterly orders and $28 billion for 2025, ending the year with a record $30 billion backlog. Ortberg also highlighted the launch of a unified e-commerce platform and said BGS secured Boeing’s largest-ever commercial component services deal, while government services recorded its highest orders ever in 2025, including a C-17 modernization support contract in the quarter.
Financial results, portfolio actions, and 2026 cash flow outlook
On the consolidated results, Malave reported fourth-quarter revenue of $23.9 billion, the highest quarterly total since 2018, up 57% year-over-year on higher commercial deliveries and defense volume. Core EPS was $9.92, reflecting an $11.83 gain tied to closing the digital aviation solutions divestiture. Free cash flow was positive $375 million, which Malave said was slightly above expectations shared the prior month due to higher commercial deliveries and improved working capital.
For the full year, Boeing reported revenue of $89.5 billion, up 34%, and core EPS of $1.19, driven largely by the digital aviation solutions gain and improved performance. Free cash flow for 2025 was a $1.9 billion usage, which Malave said improved significantly year-over-year.
Ortberg said Boeing completed the acquisition of Spirit AeroSystems to support production stability and improve safety and quality across factories and the supply chain. Malave said cash and marketable securities rose to $29.4 billion, primarily from $10.6 billion in proceeds from the digital aviation solutions transaction, partially offset by $3 billion of debt repayment tied to the Spirit acquisition. Boeing ended the year with $54.1 billion of debt and maintained access to $10 billion of undrawn revolving credit facilities.
Looking ahead, Malave reaffirmed guidance for 2026 free cash flow of $1 billion to $3 billion, including an expected unfavorable impact of roughly $1 billion from incorporating Spirit. He said cash flow is expected to improve year-over-year on higher commercial deliveries, better BDS performance as the business stabilizes, and steady growth at BGS. Boeing expects capital expenditures to rise to about $4 billion in 2026, including Spirit, after investing nearly $3 billion in 2025. Malave also said Boeing expects first-half 2026 cash usage due to seasonality, with the second half turning positive and accelerating.
Management described several temporary cash flow headwinds, including the delayed 777X first delivery (now planned for 2027), customer considerations and excess advances tied to prior 737 and 787 delivery delays, runoff of prior BDS charges, a DOJ payment shifting from 2025 to 2026, and elevated capital spending. In Q&A, Malave said excess advances and customer considerations are “generally close to each other” in 2026, but excess advances are expected to “burn down quicker” than considerations.
Malave said that, adjusted for certain temporary items, underlying free cash flow potential would be “high single-digits” in 2026, and he repeated that reaching $10 billion in annual free cash flow is “very attainable,” while adding that the business has potential to exceed that level longer term, contingent on certification milestones, commercial rate increases, BDS margin improvement, and continued BGS performance.
About Boeing (NYSE:BA)
Boeing Company (NYSE: BA) is an American multinational corporation that designs, manufactures and services commercial airplanes, defense systems, and space and security technologies. Founded in 1916 by William E. Boeing in Seattle, the company today operates as an integrated aerospace and defense contractor with a global customer base. Boeing relocated its corporate headquarters to Arlington, Virginia in 2022 and maintains extensive engineering, manufacturing and service operations across the United States and around the world.
Boeing’s principal lines of business include Commercial Airplanes, which produces and supports a range of jetliners used by airlines globally; Defense, Space & Security, which develops military aircraft, rotorcraft, surveillance and reconnaissance systems, satellites, and launch and missile systems; and Boeing Global Services, which provides aftermarket maintenance, training, spare parts, digital analytics and logistics support.
